Scott Power: ASX healthcare catches a bid in mixed reporting season

ASX healthcare companies have received a thorough check-up in the latest reporting season. Pic: Getty Images

The ASX healthcare sector moved up 4.23% this week, while the broader market rose 1.34%
Morgans cuts 12-month price target for Polynovo and Somnomed but sees upside in Tetratherix after latest trading updates
Imricor launches US commercial operations with first sale of NorthStar interventional MRI mapping and guidance system following FDA approval

Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, gives his take on the ASX healthcare sector for the week.

 

While it’s been a volatile week for global equity markets, the ASX healthcare sector has stayed in the green, continuing its recovery story.

Near close on Friday, the XHJ was up a solid 4.63% over the past five days, despite falling for the last trading of the week, outperforming the benchmark S&P/ASX 200 (ASX:XJO) which rose 1.34% over the same period.

The week was dominated by quarterly reporting season for the sector. Morgans senior healthcare analyst Scott Power said overall the results were mixed.

“Companies offering near-term catalysts such as regulatory approvals and clinical trial milestones attracted investor attention,” he said.

“However, those relying on operational execution, including sales growth and order momentum, are experiencing a slowdown.”

 

CSL rise boosts healthcare stocks

The ASX healthcare sector’s largest stock CSL (ASX:CSL) surged about 7% on Wednesday after unveiling plans to start trials for its next-generation Horizon 2 manufacturing process, a key initiative aimed at boosting immunoglobulin (Ig) production and improving operational efficiency.

Horizon 2 is a patented technology designed to extract significantly more Ig from the same volume of plasma, potentially lowering production costs and increasing manufacturing capacity without requiring additional donations.

Following discussions with the US Food and Drug Administration (FDA) and European Medicines Agency (EMA), CSL will undertake studies to demonstrate safety and efficacy of Ig produced using the new process to gain regulatory approval

Clinical activities are expected to kick off in mid-2027 using material manufactured at CSL’s Broadmeadows facility.

Meanwhile, Morgans healthcare analyst Dr Derek Jellinek wrote in a research note that CSL’s Nasdaq-listed plasma peer Grifols delivered a mixed first half result, highlighting several positive read-throughs for the Australian biotech.

He wrote the key takeaway for CSL was continued strength in Ig demand. Grifols reported Ig sales growth of 12.8% and forecast US and core European demand to continue growing at a mid-to-high single-digit pace.

“While the Grifols result does not resolve CSL’s near-term execution issues, we believe it provides further evidence that the underlying plasma-derived therapies market remains structurally attractive and that improving plasma economics remains a credible long-term margin lever,” Jellinek wrote.

Morgans maintains a buy rating on CSL and 12-month target price of $147.59.

 

Morgans cuts PolyNovo price target

Morgans has cut its 12-month price target on wound care group PolyNovo (ASX:PNV) to $1.48 from $1.56 but maintains a buy rating after the company’s FY26 trading update revealed slower-than-expected H2 sales.

FY26 revenue rose 13% to $143.7m, with commercial sales up 16.7% to $138.4m.

US sales increased 15.5% for the year, although second-half sales slowed, which management attributed to seasonality and shifts in the reimbursement market.

Sales of its new product NovoSorb MTX almost doubled to $12.6m and despite the softer sales momentum, PolyNovo generated operating cash flow of $24m and free cash flow of $10.4m, with cash increasing to $35.4m.

Power noted its manufacturing expansion was largely complete, with the new facility in Melbourne validated and just $1.5m in capital expenditure expected in H1 FY27.

PolyNovo has received $3.5m in insurance payments following the November 2025 fire at its R&D Innovation Centre, with further payments expected in 1H FY27.

“On the positive side cash generation has been strong,” Power said.

“PNV is well positioned to deliver material EBITDA growth in FY27 and FY28 through manufacturing expansion, larger sales force and new product growth (MTX),” Power said.

Morgans remains confident revenue growth above 20% will return in FY27, supported by expanded manufacturing capacity, a larger US sales force and new product launches.

Near-term catalysts include the full FY26 results and an expected FDA submission for full-thickness burns in H1 FY27.

 

Morgan’s sees upside in Tetratherix

Morgans has increased its 12-month price target for Tetratherix (ASX:TTX) from $7.15 to $8.59, maintaining a 12-month speculative buy rating with the broker saying it’s “ticking all the boxes”.

Power said Tetratherix posted a “solid Q4 FY26 cash flow result”, noting positive operating cash flow for the quarter because of receipt of an annual US$3m (A$4.6m) licence fee from Superpower Health.

Following a $15.6m capital raise, Power said Tetratherix was in a strong financial position.

Tetratherix launched a precision medicine franchise in March built on its proprietary Tetramatrix platform polymer and inked an exclusive R&D and licensing deal with Superpower Health.

Under the deal Superpower is paying Tetratherix the lucrative annual licence fee for up to 10 years and is purchasing Tetratherix’s Tetramatrix polymer, branded STEPP, for intranasal delivery of hormones and peptides, like GLP1s.

In what could prove a tailwind to the deal, The FDA’s Pharmacy Compounding Advisory Committee (PCAC) last week voted to add several popular peptides to the list of compounds pharmacies are legally allowed to make.

“We note this is not an approval, and the FDA must still decide whether to accept the recommendations,” Power said.

“However, we view it as positive for compounding pharmacies like Superpower Health.”

Power said Tetratherix had multiple upcoming catalysts including FDA 501(k) clearances for its dental product Tegenix and TegenEOS orthopaedic product along with progress on its pivotal trial for tissue spacing product Tutelix.

“We have revised up our FY26 forecasts on a lower cost base and our long-term Precision Medicine forecasts, reflecting a higher level of confidence in its growth prospects,” he said.

 

Somnomed misses FY26 revenue guidance

Morgans has reduced its 12-month target price from 99c to 75c for Somnomed (ASX:SOM) after release of its preliminary unaudited FY26 trading update.

Revenue was $114-115m, short of the $119-126m guidance range and Morgans forecast of $122m.

Stronger than expected cost-savings preserved EBITDA, which sat toward the middle of the $10-12m guidance and Morgans forecast of $11.2m.

This result was attributed to changed European reimbursement rules and shifts in referral pathways, creating a structural challenge, with underlying demand intact and management focused on navigating the pathway and rebuilding momentum.

“The view of Europe as a clean, steady-state growth story has been dented,”  Morgans healthcare analyst Iain Wilkie wrote in a research note.

The provider of oral appliance treatments for sleep-related breathing disorders and obstructive sleep apnoea (OSA) also announced Amrita Blickstead was stepping down as co-CEO and executive director.

The company, which Wilkie has flagged as an M&A target, will transition to sole leadership under co-CEO Karen Borg.

 

Imricor achieves first NorthStar US commercial sales

Imricor has kicked off its US commercial operations with Rady Children’s Hospital – San Diego becoming the company’s first US customer and purchasing its NorthStar interventional MRI (iMR) mapping and guidance system.

The sale follows FDA 510(k) clearances for Imricor’s NorthStar and the Vision-MR Diagnostic Catheter along with recent pediatric label expansions that allow use in patients of all ages.

The sale marks the launch of Imricor Cardiovascular, a vertical that opens an entirely new market for the company alongside its electrophysiology and ablation business.

Imricor estimates it can now target more than 250 US children’s hospitals and 2000 adult hospitals performing cardiac catheterisation procedures.

“First commercial sales into the US and into a new vertical is a major positive for Imricor,” Power said.

“Additional near-term sales are expected to be announced.”

Power said further upcoming catalysts were expected for Imricor including US approval for atrial flutter and additional EU procedures for ventricular tachycardia.

Morgans has a speculative buy rating on Imricor and a 12-month price target of $2.94.

Morgan’s see several other applications for Imricor’s technology including in neurology and oncology, which represents potential upside not factored into its valuation.

“For now, our focus remains on the company gaining approval for the various ablation procedures and subsequent sales of consumables and capital equipment,” Power said.

 

Power’s stock watch – Countdown to Blinklab ADHD results

Power said Blinklab (ASX:BB1) was due to report top-line results from a European ADHD study of its smartphone-based platform for the condition dubbed Dx2.

The company has also developed a smartphone-based diagnostic platform for autism called Dx1 with a pivotal trial to secure US FDA 510(k) clearance underway, with submission targeted end CY26.

“This will be a key catalyst for the stock and precedes the read out of its autism results at the end of CY26.

“BB1 is well funded following a recent $17m capital raise.”

Morgans has a speculative buy on Blinklab and a 12-month target price of $1.76.

 

 

Disclosure: Scott Power owns shares in CSL, Imricor Medical Systems and Tetratratherix, BlinkLab

Corporate disclosure: Morgans Corporate was joint lead manager to the placement of shares for Imricor Medical Systems in April 2026 and BlinkLab in April 2026 and Tetratherix in May 2026 and has received fees in this regard.